Impacted: Health plan clients

What you need to know 
As you may be aware from previous communications, on Jan. 6, 2025, CVS Health announced that it will only accept payor contracts for commercial prescriptions dispensed through CVS Pharmacy® that follow the pharmacy’s new CVS CostVantage reimbursement model. This shift marks a significant trend in the industry with more pharmacies advancing reimbursement models, moving away from Average Wholesale Price (AWP) based models to cost-plus or alternative reference-based pricing, such as National Average Drug Acquisition Cost (NADAC) and Wholesale Acquisition Cost (WAC).

At Prime Therapeutics (Prime), we believe it is essential to work with pharmacies to ensure our clients and their members continue to have access to affordable medications and quality care. To keep you informed, provided is more information on CVS’ CostVantage program, Prime’s response and client considerations. Note: this is only preliminary information based on what we know today. More comprehensive details will be shared as we gain additional insights. 

Stay tuned for an upcoming client webcast invite to learn more on this important topic. 

What is CVS CostVantage?
CVS CostVantage is a reimbursement model introduced by CVS Pharmacy for commercial prescriptions dispensed through CVS Pharmacy. According to CVS, this model aims to create a more transparent and sustainable approach to pharmacy reimbursement. Effective Jan. 1, 2025, CVS is requiring all commercial payers adopt this model for the pharmacy to continue as a participating provider in the payor’s network. 

Provided are a few highlights: 

• CVS CostVantage applies only to reimbursement guarantees for participating CVS pharmacies and is separate from CVS/Caremark’s TrueCost, which applies rebates and fees at the point-of-sale (POS). 

• In 2025, CostVantage applies only to commercial business. CVS states it will be extended to government programs starting Jan. 1, 2026. 

• CVS does not require POS pricing changes under this new model, currently. Payers can continue using AWP + dispensing fees to adjudicate claims but must reconcile POS pricing to CVS CostVantage targets annually using their internal acquisition cost plus mark up and per medication dispensing fee. 

• Unlike Mark Cuban Cost Plus Drug Company, CVS CostVantage varies mark-ups and dispensing fees by payer and network. 

• CVS indicates that this model will “much more closely” reflect what the company’s pharmacies pay to acquire the drugs. 

• CVS states that the shift to this reimbursement is intended to be cost neutral in aggregate. 

Prime’s response and action
Pharmacy reimbursement is quickly transitioning from AWP-based models to cost-plus or alternative reference-based pricing like NADAC and WAC. As such, Prime is dedicated to ensuring members have access to affordable medications and quality care. To do so, we have identified the following responses and actions: 

• As applicable for the network and CVS agreement, Prime or our subcontractor will reconcile with CVS Pharmacy annually based on acquisition cost plus, as per each agreement. 

• In 2025, Prime will balance CVS’ cost-plus reimbursement at the POS to minimize member impact from pricing variations. Prime monitors POS pricing weekly and adjusts accordingly. This means that members’ costs at POS will remain aligned to 2024 pricing with normal year to year variances due to benefit changes. 

• There will be no change to client discount guarantee reconciliations in 2025. Prime will continue to monitor for future impact as this reimbursement structure evolves and more providers adopt a similar approach.  

• Prime’s underwriting team is assessing their underwriting models to consider the impacts of cost-plus, reference-based, and mandated reimbursement when setting guarantees. Note: Prime is preparing our underwriting team to be available to collaborate with client actuarial teams to adjust underwriting models for pricing changes. 

• Prime will audit CVS’ pricing according to our agreement. 

Client considerations 
Prime is preparing its underwriting team to consult with clients' commercial underwriting teams on the following considerations in Q2 2025: 

• Pricing arrangements and guarantee structures with downstream employer groups, leveraging contractual language to minimize possible financial risk.

• Assessment of downstream agreements for the ability to revise guarantees due to market-driven events and legal changes, including state-mandated pharmacy reimbursement. 

• Adding Prime’s recommended proposal/contract caveat language to add further protections. 

• Developing go to market strategies and underwriting considerations for pharmacy reimbursement variations based on cost-plus or alternative reference-based models.  

Next steps
Prime recognizes the significance of this topic and is dedicated to keeping you informed. Ensuring your needs are met through collaboration is a top priority. A client webcast will be scheduled soon to provide further details and address any questions. Please keep an eye out out for the upcoming invitation. 

Questions?
For questions, please contact your account team representative or clientcommunications@primetherapeutics.com.